Course ledger contains every transaction ever processed, enabling a

 

 

 

 

 

Course Name
: Research Methods

Name : Oday
Abu Ragheb

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Dr. Feyza A.
Bhatti

 

Introduction:

 

Since the the beginning of the 21st
century, technology has reached its peak in human history. This can be viewed
in many fields, notably in the economic field where bitcoin has been created.
Some of you may ask why did bitcoin suddenly appear out of the blue, or simply
what is bitcoin? In this research, all aspects of the bitcoin will be targeted
and elaborated. Bitcoin is a type of virtual currency that was created by an
anonymous person known as Satoshi Nakamoto. Transactions are carried out
without the need for banks; also referred to as direct transactions, which is
peer to peer. Sadly, no information is present about the creator of bitcoin, or
his/her reason for creating it, but scholars argue that the reason for
inventing bitcoin is to eliminate the needs of using a bank to carry out transactions.
Bitcoin suddenly skyrocketed in the middle 2017 where price jumps exceeded
expectations. Currently, a single bitcoin is worth more than 14,000$ which is
an enormous amount. Surprisingly, the starting price for 1 bitcoin was 0.08$.  So basically, you could have been a
millionaire through paying 5 dollars and 71 cents. So why did bitcoin
skyrocket? One factor is the important aspect that makes bitcoin unique, which
is eliminating the use of banks. This in turn makes a buyer or seller free from
any regulations imposed by the government or the bank system.

There are many advantages of bitcoin
including security and control, transparency and neutrality and those will be
discussed later on in the report in addition to the limitation of bitcoin.

 From a user perspective, Bitcoin is simply a
mobile app or computer program that gives an individual a personal wallet and
enables a user to send and get bitcoins with them. This is the way Bitcoin
works for most users. Behind the scenes, the Bitcoin network is sharing a
public ledger called the “block chain”.  This ledger contains every transaction ever
processed, enabling a client’s PC to verify the validity of every exchange. The
authenticity of every transaction is protected by digital signatures
corresponding to the sending addresses, enabling all clients to have full
control over sending bitcoins from their own Bitcoin addresses. Likewise,
anybody can process transaction using the computing power of specialized
hardware and earn a reward in bitcoins for this service. This is often called
“mining”.

 

 

 

The next part of this report will
discuss the literature reviewed in order to collect data to construct the
report.

Literature review:

Blockchain :

According to (Santori, DeRidder and
Grosse, 2016) A blockchain is not a currency at all. Rather, it is a system for
approving, clearing, settling, following and recording the ownership of assets
as they are traded. The Bitcoin blockchain is only one of those systems. As of
now, the Bitcoin Blockchain is the most widespread use of Blockchain
Technology, however different blockchains exist also and are by and large
generally used for different purposes. Blockchain Technology includes a ledger
of transactions that are kept up on a system of servers called “nodes”
Each node maintains a ledger reflecting the ownership of assets.

 The ledger is “distributed” because
it is maintained simultaneously on all of the nodes in the network. The ledger
contains continuous and complete record of all transactions going back to the
continuous and complete (the “chain”). Approved transactions are
added to the ledger in groups or “Blocks “using cryptographic techniques
to guarantee the honesty of the transactions. It is this recording of
transactions in blocks to the chain of transactions reflected in the ledger
that is the source of the expression “blockchain.” In the case of the
Bitcoin blockchain, the distributed ledger reflects the current ownership at
any given time, and in addition all earlier Bitcoin transactions going back to
the creation of the Bitcoin blockchain. In this way, when a party transfers
Bitcoins, the transaction is published to the network, which confirms with a
high level of certainty that the transferring party owns the Bitcoins and
hasn’t, for instance, as of now transferred the Bitcoins to another person.
transactions that are not approved over the network are rejected. on other
words, the network builds up trust in the transaction without the involvement
of a typical intermediary, such as a bank. transactions in the Bitcoin
Blockchain are secure because that the network employs sophisticated security
algorithms, and because the transaction ledger is distributed across a network
of unrelated computers.

(Santori, DeRidder and Grosse, 2016)
stats that in order to compromise the security of the Bitcoin Blockchain, a
hacker would need more computing power than half the nodes in the Bitcoin
Blockchain. Due to the size of the Bitcoin Blockchain. this is hard to do.
Other so-called “public” blockchains are secured not by mining (known as
“proof-of-work”). but by demonstrating control over some of the assets native
to the ledger (known as “proof-of-stake”). A blockchain need not be public,
however. The blockchains that have caught the creative impulses (and spending
plans) of numerous budgetary foundations are known as “private”
blockchains because only certain pre-approved participants may join them. These
blockchains use an assortment of means to guarantee the character of parties to
a transaction and to achieve consensus as to the validity of transactions.

Mining:

(bitcoin.org, 2017) Mining is the
way toward spending registering energy to process transactions, secure the
network, and keep everybody in the system synchronized together. It can be seen
like the Bitcoin server farm aside from that it has been intended to be
completely decentralized with miners working in all nations and no individual
having control over the network. This procedure is alluded to as
“mining” as a relationship to gold mining since it is additionally an
impermanent system used to issue new bitcoins. Unlike gold mining, however,
Bitcoin mining gives a reward in return to helpful administrations required to
work a safe installment arrange. Mining will in any case be required after the
last bitcoin is issued.

Anyone can turn into a Bitcoin miner
by running programming with particular equipment. Mining software listens for
transactions broadcast through the peer-to-peer network and performs
appropriate tasks to process and confirm these transactions. Bitcoin miners
play out this work since they can win exchange charges paid by clients for
quicker transaction preparing, and recently made bitcoins issued into reality
as per a fixed formula.

For new transactions to be
confirmed, they should be incorporated into a block alongside a mathematical
proof of work. Such proofs are difficult to generate because there is no real
way to make them other than by attempting billions of calculations per second.
This expects miners to play out these estimations previously their blocks are
acknowledged by the network and before they are rewarded. As more individuals
begin to mine, the difficulty of finding valid blocks is automatically
increased by the network to ensure that the average time to find a block
remains equal to 10 minutes. Subsequently, mining is an exceptionally focused business
where no individual miner can control what is incorporated into the blockchain
(bitcoin.org, 2017).

The proof of work is designed
intended to rely upon the past block to force a chronological order in the
blockchain. This makes it exponentially hard to turn around past transactions
since this requires the recalculation of the proofs of work of all the
resulting blocks. At the point when two blocks are found in the meantime,
miners deal with the first block they get and switch to the longest chain of blocks
when the next block is found. This enables mining to secure and keep up a
global consensus based on processing power.

What are the benefits of Bitcoin?

(bitcoin.org, 2017) There are Many
benefit of bitcoin firstly, Payment opportunity – It is possible to send and
get bitcoins anyplace on the planet whenever. No bank holidays. No borders. No
bureaucracy. Bitcoin enables its users to be in full control of their money
secondly, allowing bitcoin users to Choose their own fees, since There is no
charge to get bitcoins, and numerous wallets let you control how substantial a
fee to pay when spending. Higher fees can encourage faster confirmation of your
transactions. Fees are unrelated to the amount transferred, so it’s possible to
send 100,000 bitcoins for the same fee it costs to send 1 bitcoin. Also,
merchant processors exist to assist merchants in processing transactions, converting
bitcoins to fiat currency and depositing funds directly into merchants’ bank
accounts daily. As these services are based on Bitcoin, they can be offered for
much lower charges than with PayPal or credit cards network.

The third benefit of bitcoin is
Fewer risks for merchants, as Bitcoin transactions are secure, irreversible,
and do not contain clients’ touchy or personal data. This protects merchants
from losses caused by fraud or fraudulent charge backs, and there is no
requirement for PCI compliance. Merchants can without much of a stretch extend
to new markets where either credit cards are not accessible or fraud rates are
markets. The net outcomes are bringing down charges, bigger markets, and less
managerial expenses.

 

 

 Fourthly allowing Security and control,
Bitcoin users are in full control of their transactions; it is inconceivable
for merchants to force undesirable or unnoticed accuses as can occur of other
payment methods. Bitcoin payments can be made without personal information
attached to the transaction. This offers solid assurance against identity
fraud. Bitcoin users can protect their money with backup and encryption.

The last benefit of bitcoin
mentioned in this report is being Transparent and neutral, All information
concerning the Bitcoin money supply itself is promptly accessible on the
blockchain for anyone to verify and use continuously. No individual or
association can control or control the Bitcoin convention since it is
cryptographically secure. This enables the core of Bitcoin to be trusted for
being totally unbiased, straightforward and unsurprising.

What are the impediments of Bitcoin?

(bitcoin.org, 2017). As mentioned
earlier in this report there are many advantages of bitcoin, on the other hand
there are also limitation of bitcoin and those are firstly, Degree of
acknowledgment, many individuals are as yet uninformed of Bitcoin.
Consistently, more businesses accept bitcoins because they want the advantages
of doing so, but the list remains small and still needs to grow in order to
benefit from network effects. Secondly, Volatility, the total value of bitcoins
available for use and the quantity of organizations using Bitcoin are still
little contrasted with what they could be. In this manner, relatively small
events, trades, or business activities can significantly affect the price. In theory,
this volatility will diminish as Bitcoin markets and the technology matures. At
no other time has the world seen a start-up currency, so it is really difficult
(and exciting) to imagine how it will play out. Lastly, Ongoing development,
Bitcoin software is still in beta with incomplete features in active
development. New tools, features, and services are being developed to make
Bitcoin more secure and open to the majority. Some of these are as yet not
prepared for everybody. Most Bitcoin organizations are new and still offer no
protection. When all is said in done, Bitcoin is still in the process of
maturing.

 

 

 

How can we obtain
bitcoin?

(http://moneyandstate.com, 2012) When
one understands why Bitcoins are useful and therefore valuable, one might wish
to obtain some. But how? Well, how does one obtain any currency? There are two
basic ways, either by selling goods and services for it, or by buying it at an
exchange.

We’ll examine buying at an exchange first.
“Exchanges” are simply websites where buyers and sellers come together to trade
one currency for another. If you have an account at an exchange, and fund the
exchange with Bernanke Bucks, you can buy Bitcoins.

The practical steps for doing this are as
follows:

The first step is to Create a free account at
a trustworthy exchange. The second step is to Put money in the
exchange, typically by linking your bank account or sending a wire. The last
step is to ensure that your funds are at the exchange, you can buy
Bitcoins at the current market price. The coins then stay at the exchange in
your account until you send them somewhere else (to your personal wallet or
someone you’d like to pay, etc). If you want to sell Bitcoins for dollars, you
simply do the process in reverse – send the Bitcoins to an exchange, sell them
at market price, and transfer the USD to your bank.

 

Methodology:

Research Aim and
Questions:

u  In this research, all aspects of the
bitcoin will be targeted and elaborated.

u  What is the bitcoin and How does
bitcoin work?

u  How can we obtain bitcoin?

Planning a research before carrying it out is essential, as
it provides a guideline for the researcher to follow, throughout the research
which also reflects upon the credibility and reliability of the research.
Therefore, designing the research and the methods to be used becomes a key area
of impact upon the project as a whole. There are various types of methodologies
that could be used for different research types that could be carried out
including descriptive, analytical and empirical researches. (New Age
Publishers, 2013)

Type of Data:

After determining the type of research to be used for data
collection, the next important step is to identify the type of data to be
collected for the purpose of the research. According to (Acaps, 2012) there are
two types of different data; qualitative and quantitative data. Each of these
types is different in terms of the information they provide as well as the ways
in which they are presented. Qualitative data researches the quality of people,
processes and meanings that cannot be measured numerically, while on the other
and quantitative data is data that can be measured numerically and presented in
graphs, figures statistically. (American University, 2011)

The type of data chosen to be collected for this research,
was the collection of both qualitative and quantitative data. Which means that
the report will rely on the use of a mixed method data collection. A mixed
method ensures higher credibility of data collected and results found. (NSF,
2002) Thus both qualitative and quantitative data will be collected from the
secondary resources mentioned earlier on in this chapter.

 

 

 

Research Limitations:

Researchers are often met by difficulties that cause
limitations for their study and their research, which are known as research
limitations and it can be defined as the characteristics or design of the
methodology that had an impact over the results and findings of the study.
(USC, 2016)

This research was faced with numerous limitations that had
an impact over the study and the research as well as the results. Firstly, due
to time constrains, primary research was not possible to use as it requires a
long period of time to collect and analyses data in addition to the expenses
related to primary collection of data. In order to make up for that, the use of
secondary research was adopted as it requires less time to collect data and is
less costly to use. However the use of primary research would have provided
more accurate data and therefore more accurate results of the study.

  Another limitation
was the absence of funding for this research which was also a factor that
helped eliminate the possibility of using primary research, as this project is
carried out by a student for educational reasons. Availability of funding for
the research could have helped in providing more accurate results. Lack of
previous research over the topic was also a limitation as the absence of prior
information about the topic made it more difficult to carry out a research of
an unfamiliar topic.

 

 

 

 

 

 

 

 

 

 

 

 

References:

 

Santori,
M., DeRidder, C. and Grosse, J. (2016). Corporate & Securities –
Technology. pillsbury, p.4.

 

bitcoin.org.
(2017). Frequently Asked Questions. online Available at:
http://bitcoin.org Accessed 9 Jan. 2018.

 

http://moneyandstate.com.
(2012). BITCOIN – THE LIBERTARIAN INTRODUCTION. online Available
at: http://moneyandstate.com Accessed 9 Jan. 2018.